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Question 6 ( 5 marks) Suppose a firm has 10.4 million shares of common stock outstanding with a par value of $1 per share. The

Question 6 ( 5 marks)

Suppose a firm has 10.4 million shares of common stock outstanding with a par value of $1 per share. The current market price per share is $12. The firm has outstanding debt with a par value of $56 million selling at 102% of par. Debtholders of the firm require a 6% return. The risk free rate is 3%. The firms beta is 0.8 The expected return on the market is 7%. The corporate tax rate is 33.3% What is the firms weighted average cost of capital (WACC)?

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